The Commons Treasury Committee has published its report on financial regulation, which looks at the Government’s proposals for overhaul of the regulatory structure. The Committee is worried about the speed with which the Government wants to introduce the changes and says it is important to get regulatory reform right. It says there should be pre-legislative scrutiny of plans over a reasonable timescale, which should be followed by enough time for Parliamentary scrutiny. The Government should fully consider all responses to the initial consultation before drafting a Bill. Among the more specific points the report makes are:
- the Government should fully consider the report of the Independent Committee on Banking before reaching its final views;
- much more detail is needed on what the Government means by “financial stability”, and the role and tools of the Financial Policy Committee (FPC) must be clear, as must its accountability. The Committee asks the Government also to explain the proposed balance of Bank of England and other members for the FPC. It also stresses that accountability of the FPC is as important as, but different from, that of the Monetary Policy Committee;
- on the Prudential Regulation Authority (PRA) and Consumer Protection and Markets Authority (CPMA), the report finds some inconsistency between what the Government has said and what the consultation implies. It is also critical of any suggestion the CPMA should be seen as a consumer champion. It says the CPMA should have competition objectives and stresses the need for it to have a strong markets division;
- the consultation says little about the costs of the changes that consumers will ultimately bear.
The report includes written and oral evidence from the Committee. (Source: Press Release, Financial Regulation: a preliminary consideration of the Government’s proposals, Seventh Report of Session 2010-11 Volumes II and III)